With the last couple of years of the pandemic, and partly working from home, you may feel that whilst you don’t want to move, you certainly need more space.

However, it may not require large funds to make remortgaging for the extra money a worthwhile option. This is where a secured loan could be a solution, and for possibly other needs too, such as consolidating debts, or helping to mitigate the cost of living rises.

Secured loans have seen a sizeable resurgence in recent times. The growth figures set out in the box is a continuation of the pick-up in this sector.  Q4 2021 was the highest recorded level of lending since Q4 2008 (in the aftermath of the credit crunch).*

Secured loans explained
– It’s designed for homeowners who can use part of the equity in their property to obtain a loan that would sit as a second charge on top of their mortgage – which may be with a different lender.

–  If you are using the funds to help consolidate your debts (at a lower interest rate), then taking out this type of loan may mean you end up paying more in interest payments, than if you paid off your credit and store card debts over a shorter period.

–  Conversely, the repayments for a secured loan are set over an agreed timeframe, so it does provide a disciplined way to pay off borrowings.

When a secured loan could be considered
–  You may not want to jeopardise your current mortgage deal, due to the rate you’ve secured, or perhaps not wanting to face early repayment charges against the overall loan vs. the small extra funds you require – or perhaps it’s both.

–  Any extra mortgage loan borrowing may put you into a higher loan-to-value band, possibly resulting in an increased interest rate applicable to the whole loan.

–  You might be sitting on an interest-only mortgage and should you require further funds, then it might require you to move onto a repayment mortgage scenario. In which case, your monthly payments are likely to immediately rise, as both the capital and interest will then be paid off.

–  You could be a mortgage prisoner, where the option to remortgage is not on offer.
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Secured loans – the facts
–  Secured loan lending was up 76% year-on-year, and totalled £118m in December 2021.
–  Average loan size – £47,394.
–  Average loan completion time – 23 days.
–  Average loan term – 16.4 years.
(Source: *Loans Warehouse, Secured Loan Index, December 2021)

If this route is of interest, then please get in touch to find out more.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage, or any other debt secured on it.

To hear more, or if you have any questions, please email, or call us on: 0131 344 4301.